1. Field of Invention
The invention relates to a system and method for betting on sporting events. In particular, this invention awards pay outs based upon the difference between the actual and predicted results.
2. Background Description of Sports Betting
Sports bettors (“bettors”) place sports bets (“bets”) on a sports figure, sports team, or group of figures and/or teams (“contestants”) at a legal sports betting location (“house” or “sports book”). In particular, sports betting operates in the following manner:
The House. The house offers bettors an impartial and unbiased betting environment in which to place their wagers. In return for providing such neutral brokering services, the house charges a fee (“vig” or “vigorish”) on all bets or, in some cases, just winning bets.
To remain impartial and unbiased, the house avoids financial interest in the outcome of the sporting event by matching equal amounts on opposing contestants (“balancing the books”). With balanced books, the house pays the winning bets with the losing bets (“covering”) and generates profits by collecting vigs. For example, the house accepts bets of $1,100,000 on Team A and $1,100,000 on Team B. By charging a 10% vig on all winning bets, the house will collect $2,200,000 and pay out $2.1 million, with a profit of $100,000 from vigs.
As often happens in sporting events, however, bettors favor one contestant (“favorite”) over another (“underdog”) and, as a result, a greater sum is bet on the favorite (“unbalanced books”). With unbalanced books, the house loses its neutrality, as follows:                If the house allows unbalanced books and the favorite wins, the losing bets placed on the underdog will not cover the bets placed on the favorite. The house will then have to pay winning bets out of its own funds.        If the house allows unbalanced books and the underdog wins, the losing bets placed on the favorite will more than cover the bets placed on the underdog. The house will then have made a profit beyond the vigs.        
Imbalanced books strip the house of its neutrality and diminish its ability to attract and serve bettors; the more imbalanced the books, the more diminished the abilities. In addition, imbalanced books also introduce undesirable fluctuations in revenues and profit. The house, therefore, avoids these risks by balancing the bets made on opposing contestants.
The Bets. To equalize betting on the favorite and underdog, the house uses several types of bets, “Spread-Line” “Money-Line,” and “Event-Total-Line.” These bets provide the house with the flexibility to attract betting on either favorite or underdog and, therefore, preserve neutrality, as follows:
Spread-Line Bet: The spread-line bet pays for selecting the contestant that wins or loses by a predetermined amount (“spread-line”). The favorite must win the contest by more than the spread. The underdog must lose by less than the spread-line or win the contest.
For example, the house sets the spread-line as New York −7 (favorite) at Miami +7 (underdog). The bettor bets on New York, the favorite. If New York wins by more than 7 points, the bettor wins the bet. If New York wins by less than 7 or Miami wins, the bettor loses the bet. And, if New York wins by exactly 7 points, the bet is returned to the bettor (“no action”).
The spread-line bet lets the house adjust the handicap to affect the likelihood of winning. If more betting is required on the underdog, the house increases the spread-line, and, therefore, makes it easier for the underdog to win. For example, adjusting the spread-line to New York −10 at Miami +10 would attract more wagers on Miami.
Money-Line Bet: The money-line bet pays for selecting the actual winning contestant, with different pay outs for selecting the favorite or the underdog (“money-line”). A winning bet on the favorite returns less than 100%; a winning bet on the underdog returns greater than 100%.
For example, the house sets the money-line on New York −150 (favorite) at Miami +135 (underdog). To bet on New York, the bettor must wager $150 to win $100 (i.e. 66.67% return). To bet on Miami, the bettor must wager $100 to win $135 (i.e. 135% return).
The money-line bet lets the house adjust the odds to affect the pay outs for winning. If more betting is required on the underdog, the house increases the money-line, and therefore, makes it more rewarding to bet on the underdog. For example, adjusting the money-line to New York −200 at Miami +175 would attract more wagers on Miami.
Event-Total-Line Bet: The event-total-line bet pays if the contestants exceed (“over”) or fail to attain (“under”) a pre-determined score (“event-total-line”). To win an over bet, the contestants must combine to score more than the event-total-line. To win an under bet, the contestants must combine to score less than the event-total-line. The winner of the contest is irrelevant.
For example, the house sets the event-total-line to 45 on the New York-Miami game. The bettor bets on over. If the teams combine to score more than 45 points, the bettor wins the bet. If the teams combine to score less than 45 points, the bettor loses the bet. And, if the teams combine to score exactly 45 points, the game is considered no action.
The event-total-line bet allows the house to adjust the even-total-line to affect the likelihood of achieving the desired score. If more betting is required on the under bet, the house raises the event-total-line, and therefore, makes it easier to win the under bet. For example, increasing the event-total-line to 50 on the New York-Miami game would attract more under wagers.
By adjusting the spread-line, money-line, or event-total-line, the house avoids unbalanced books. Adjustments, however, are not retroactive to all bets; the bet is fixed at the time it is placed. For example, a money-line bet placed on the favorite at +140 stays at +140, even if the house raises the money-line to +180 at a later point.